First Obama, now Hollande stresses fiscal fairness

Two days after US President Barack Obama put tax reform at the heart of his re-election campaign, France's Socialist nominee François Hollande pledged to raise levies on banks, big firms and the rich to plough the country out of debt.

Debbie Bosanek, the long-time secretary of US billionaire investor Warren Buffett, made surprise appearances in the presidential campaigns of two countries this week.

“Obama said he wants the secretary of a billionaire not to have to pay more than the billionaire,'' Hollande said. “I want the same thing.''

With both the US and France running out of options to plug gaping deficits and calm jittery markets, it seems both candidates have embraced fiscal fairness as their campaign slogans.

H is for Hope

The Obama brand may have lost some of its shine back home, but it remains hugely fashionable in European countries starved of politicians with an ability to capture the public’s imagination.

Echoes of Obama’s famed “Hope” poster can be found in Hollande’s campaign T-shirt, bearing a picture of the candidate and the slogan, printed in English, “H is for Hope”. In recent outings, the Socialist candidate has even discarded the party’s traditional pink shades for his stage backdrop, opting instead for “Obama blue”.

Speaking to a crowd of journalists and supporters in Paris on Thursday, Hollande said he was "in the same frame of mind'' as the US president regarding the need to ask more from the wealthy at a time of spiralling public debt and sluggish economic growth.

"If there are sacrifices to be made, and there will be, then they will be for the wealthiest to make" he said, promising to reform the tax code so that individuals with annual earnings of 150,000 euros or more would have an income tax rate of 45%, up from the current 41% (and well above the maximum 30% put forward by Obama in the US).

The Socialist candidate also said he would push through a 15% tax increase on bank profits and go ahead with plans to separate banks’ retail activities from their more speculative market-based operations, a measure also in the pipeline in the US and Britain.

Other steps include the endorsement of an EU-wide tax on financial transactions, as well as higher taxes for large companies and lighter burdens for those with fewer than 20 employees.

Hollande, who is tipped to defeat incumbent President Nicolas Sarkozy in the forthcoming election, has made it clear the financial industry should be made to pay for the global economic downturn that precipitated Europe’s debt crisis.

“Besides, targeting the financial industry through higher taxes and stricter regulation won’t cost Hollande a penny,” said Julia Cagé, an economist at Harvard University and the Ecole d’Economie de Paris.

Mindful of the left’s reputation for profligacy, the Socialist candidate has been at pains to highlight his fiscal prudence at a time of intense market pressure on France.

On Thursday, he said his fiscal reforms would generate 29 billion euros over five years and help bring the country’s huge budget deficit down to zero by 2017.

And while he promised to spend 20 billion euros to hire 60,000 extra schooling staff and boost youth employment, he cut an earlier party pledge to create 300,000 government-aided jobs by half.

“Servicing France’s debt comes at a huge cost, and no candidate can afford to let the deficit run any further,” said Cagé, for whom “a period of austerity is simply inevitable, whoever wins the election”.

With little scope for more fiscal stimulus in the near future, it seems both Hollande and Obama will have to make do with fiscal fairness, for the time being.